Business and the Business Environment: A Comprehensive Report

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Business and the Business Environment
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Table of Contents
Introduction................................................................................................................................3
Section 1: Essay.........................................................................................................................4
Part 2 – Case Study: “The UK Supermarket sector” (LO3 & LO4)........................................10
Conclusion................................................................................................................................18
Reference list............................................................................................................................19
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Introduction
The environment of a business is the amalgamation of external as well as internal factors that
influence the organisation. The factors that affect the environment of a business are suppliers,
clients, competitors, technological factors, government activities, laws, market, and economic
and social trends. In the given study, the various types of organisations will be explained as
well as their legal structures and purposes will be discussed. The scope and size of the
various types of organisations will also be explained. The connection between the various
functions of the organisation with its structure and objectives shall be explained. The effects
of the macro and microenvironment on the business will be discussed. The relation between
the internal and external factors will also be explained. Marks and Spencer is a multinational
retail company based in Westminster, United Kingdom. Thomas Spencer and Michael Marks
have founded it in the year 1884. Archie Norman is the chairperson and Steve Rowe is the
CEO of the company (marksandspencer.com, 2019).
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Section 1: Essay
Introduction
The particular section of the study shall enumerate the findings associated with different
types of businesses that exist within the business environment of UK. The focus of the essay
shall be to acquire knowledge regarding the public, private and non-profit organisations and
their respective organisational size, purposes, and organisational structures.
P1 Explain the different types and purposes of organisations; public, private and
voluntary sectors and legal structures.
Public sector- The national or local government owns the organisations that fall in the public
sector. For instance, British Council falls in the public sector. The legal structure that it
follows is business partnership. It adheres to the rules and regulations of partnership legal
structure. In this legal structure, more than one person joins each other in the venture of
business (accountingservicesforbusiness.co.uk, 2019). The purpose of British Council is to
provide career as well as educational opportunities to the native people as per their skills.
Private sector- A person or a group of persons owns the organisations in this sector. For
instance, Marks and Spencer is a public limited company that falls in the private sector. It
follows the legal structure of public limited company. As per this legal structure, the
company has full control over its financial considerations as well as accountable for its failure
(Wps.pearsoned.co.uk, 2019). The purpose of Marks and Spencer is to cater the needs and
requirements of the people from every standard. It aims in providing high-quality products,
such as, clothing, food, home decor, and many other things (Vizard et al., 2016).
Voluntary sector- The voluntary sector provides beneficial services to the community. They
are not money-oriented rather people oriented. They might or might not charge for the
services they provide (carerssupportcentre.org.uk, 2017). For instance, BOND or “British
Overseas NGOs for Development” is a voluntary organisation. It follows the legal structure
of NGO or non-governmental organisation (bond.org.uk, 2019). The legal structure of NGO’s
are dependent on the practices and law of the country it is has been operated under
(resourcecentre.org.uk, 2019). The purpose of this organisation is to promote, represent, and
support the development of the UK organisations.
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P2 Explain the size and scope of a range of different types of organisations.
Public sector- The Government of Britain has founded the British Council in the year 1934.
Christopher Rodrigues is the chairperson of the organisation and Sir Ciaran Devane is the
chief executive (britishcouncil.org, 2019). It is a large organisation as it works in more than
100 countries and involves many people. The scope provided by the organisation is
advancement in scientific, cultural, educational, and technological cooperation. It helps in
creating an understanding and friendly knowledge between the citizens of the United
Kingdom and many other countries (britishcouncil.org, 2019). It provides opportunities and
builds relationships among people of different parts of the world as well as helps in building
trust. British Council as per the annual report of the year 2017-2018 has revenues of more
than 10 billion (britishcouncil.org, 2019). It has helped the country in maintaining is position
as a partner of China with 22% market share in education programmes of transnational. In the
year, 2017-2018 it has incorporate new models, controls, processes, and standards to make
sure that the work is financially sustainable (britishcouncil.org, 2019).
Private sector- Marks and Spencer falls in the retail sector that has been founded by in the
year 1884 by Thomas Spencer and Michael Marks. The headquarter is located in London,
United Kingdom. At present, Steve Rowe is the chief executive of the company and Archie
Norman is the chairperson. It is a large enterprise as it has worldwide presence and involves
more than eighty thousand people. The organisation has many brands such as, Autograph, per
Una, and M&S Bank (marksandspencer.com, 2019). The company has made profit of more
than 10 million in the year 2018 (marksandspencer.com, 2018). Its market share in the year
2013 was 11% in the United Kingdom. In the year 2006, it has incorporated sustainable
marketing in fishing and in fair-trade products. In the year 2007, it has taken initiative to use
sustainable materials for the production of goods as per its “Plan A” strategy (Deighton,
2017).
Voluntary sector- The BOND has been established in the year 1993 and has worked for
international development of UK organisations. At present, there are more than 400 members
in the organisation. It works with the large enterprises that have presence overseas to small
organisations in the United Kingdom. The organisation provided scope to the businesses of
the country in managing advocacy, information, and training services (preventionweb.net,
2019). It helps the native organisation in exchanging ideas, information, and experience with
the members or with another organisation.
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P3 Explain the relationship between different organisations functions and how they link
to organisational objectives and structure.
The objectives of Marks and Spencer are to provide standard quality products to the
customers, to safeguard the environment and people through using sustainable method of
development, and to create a better environment for the employees for enhancing their
performance (corporate.marksandspencer.com, 2019). The prime values of the organisation
are to provide good quality service and products to the customers, to build trust of the
consumers, and to create innovative products to attract the customers. The mission of the
company is to make products that would be easily accessible to the customers. The board of
the company has the objective of building a sustainable method that would be beneficial for
the growth of the business as well as is consistent and enhance the relationships between the
company and the stakeholders and shareholders (corporate.marksandspencer.com, 2019).
The organisation follows a flat organisational structure for smooth functioning of the
business. The flat structure is a subdivision of hierarchical structure. The power of the
manager is more in this hierarchical structure (Meehan, 2019). In this structure, the manager
or head of the company has authority over the other members of the company. This structure
though enhances the decision-making skills of the employees. However, there are less
communication amomng the members of the organisation in this structure that might lead to
wrong decision on the part of employees. In the flat structure, there is not much level unlike
the tall pyramidal structure. In every departments of the company, there is head or manager
of the unit. This structure helps the employees to become independent in making decisions
and in their work. The decision-making process is thus, faster in the company as the
employees are free to make decisions and act. The connection and sharing of information has
been enhanced in the organisation since it has adopted flat structure
(corporate.marksandspencer.com, 2016).
The motive of this structure is to maintain democracy in the organisation so that the
employees would not lose motivation. This structure of the company has made it easier to
change and adapt with the change in market (nibusinessinfo.co.uk, 2015). The company has
incorporated this structure to cut the cost of the organisation. This structure has enhanced the
speed of the tasks of every departments of the company. This new structure however, needs
to train the employees of the organisation so that they would be able to make independent
decisions that would be beneficial for the company. As per the view of the chief executive,
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the simpler structure would enhance the output of the business by maintaining a close
relationship between the customers and the members of the organisation (Davey, 2016). The
simpler structure would be focussed on the members of the team of every department. The
responsibility of the team members of the organisation has been increased. This has lead to
increase in their accountability for their decisions and actions. The structure of the
organisation helps in making different organisational functions.
Figure 1: Flat organisational structure of Marks and Spencer
(Source: Meehan, 2019)
There are different departments in the Marks and Spencer that are interlinked with each other.
They are:
Managerial department or CEO- The role of the managers in Marks and Spencer is to lead
the members and motivate them. It has the duty to build effective team and manage the tasks
of the employees of every department. It has the responsibility of recording the performance
of the employees and rewards them as per their work (Black, 2019). It has the duty to plan
and organise the members. It should manage the time for proper functioning of every
department and provide effective control on the employees. This department is interlinked
with the structure of the organisation as it is on the top level of the pyramid.
Human resource department- The human resource department has the responsibility to
recruit candidates and train them as per the needs of the specific departments. The company
requires employees who have good technical and marketing skills for the profit of the
business. They should be cooperative and influence the members so that the employees
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would learn good things from each other. The human resource department provides training
to the employees for their personal development (Noe et al., 2017). It provides coaching to
the employees for enhancing their knowledge in particular field. In this way, they would be
able to have a competitive advantage on the rival companies. This department is the part of
the flat hierarchical structure as it comes below the manager and is controlled by the
manager.
Finance department- The members of finance department should have good finance and
accounting skills to make financial decision for the company (Gitman et al., 2015). The
employees of this department have the duty to make appropriate decisions in investing money
for the company. The members of this department should develop control measures to cut the
cost and benefit the business. It can be achieved by using substitute materials for producing
goods. This department too follows the flat hierarchical structure and is monitored by the top
management.
Production department- The production department has the responsibility of producing
things. The candidate must have team management skills to cope up with the other members
in a team. The members should be innovative to create new products. They should coordinate
with each other and communicate to solve any problem. They should ensure maintenance of
good quality products. This department is also under the control of the top management or
head of the company as it follows the flat hierarchical structure.
Marketing department- The role of the marketing department is to promote and sell the
products in the market, through either online or offline methods. They should be able to
convince the buyers on buying things (Lovelock and Patterson, 2015). They should have
good communication skills to attract the customers. They should be pleasant and cordial with
the customers to make a healthy relationship with them. This department is controlled by the
managerial department and is aligned with other departments in the organisational structure.
Information Technology department- In the technology advanced era, this department uses
the help of technology such as, cloud computing social media, and such things to facilitate
the sale of the products. It helps in securing the data of the company and record the
performance of the employees. This department also follows the flat organisational structure,
as it comes under the hierarchy of the managerial department.
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Customer service- This department provides services to the customers directly. They are
involved in communicating with the customers through online websites. It helps in taking
feedback of the customers to solve their problems by modifying the features of the products
or services (Dabholkar, 2015). This department has close relationship with the customers as
they talk in behalf of the company to the customers. They should be attentive to detail and
have good memory to solve every problem of the customers. The customer service of Marks
and Spencer should note down every queries and provide solutions to them as soon as
possible. They should have pleasant tone and peaceful approach towards the customers. This
also comes under the managerial department and follows the flat organisational structure.
Every department of the organisation aims in fulfilling the goals and objective of the
company. Production department fulfils the company’s objectives by producing good quality
products. The marketing department build relationship of the company with the customers.
The financial department produces cost effective methods to cut the cost of the company as
well as it devises plan to adjust affordable pricing range for the customers. The human
resource department provides healthy environment to the employees for facilitating their
work and the manager fulfils the objectives by controlling every department’s functions.
Conclusion
It can be concluded from the given study that there are various kinds of organisations. There
scope and size have also been discussed. The various organisational functions have been
explained as well as their connection with the organisational structure has been provided. It is
essential for the organisations to follow their respective purposes of business and align their
organisational operations with respect to their corresponding organisational structures. This
allows the projected organisations to achieve their business objectives with any sort of legal
or national compliances.
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Part 2 – Case Study: “The UK Supermarket sector” (LO3 & LO4)
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
Factors Impacts on the company
Political Due to Brexit, the company has reduced their
outsourcing costs significantly. Thereby, the
company has to incur a great amount of loss.
Moreover, due to the free trade policy the
company also have to incur a huge loss. In
addition, the company also has reduced their
sales by 3%. While the labour costs, unit cost
and other financial costs have tended to
increase but it has a negative impact on the
exports.
Economical Brexit also affects the economy of the
company. Due to this, the company often has
to face small conflicts with retailers
regarding products costs and prices.
Moreover, the competitors also affect Marks
& Spencer as they are offering discounted
products to the customers. This is attracting
more customers to their company. In
addition, the GDP rate of the country has
been fallen from 1.8% in the year 2017 to
1.4% in the next year. This has a negative
impact on the company. Moreover, the
inflation rate, which has also decreased by
1.10% within a year, has also affected the
company’s growth (Heritage.org, 2019). As a
result of which the company has reduced
their prices in order maintain sustainability of
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their product in the market.
Social Marks and Spencer have a huge strength of
employees, which boosts their productivity.
Therefore, it has positive impact on the
company. However, the company lacks the
strength of new young employees who are
more energetic towards their work. They also
lose the newly learned and technically skilled
workers in their company. Therefore, it has a
negative impact in context to company’s
efficiency in productivity.
Technological Since Marks and Spencer prefers manual
work rather than work done by machines or
automatic, the company already has some
negative concerns. However, Marks and
Spencer have a strong grip over the social
media, which enables them to capitalize their
avenues. It is therefore, the company has
developed a digital platform in order to offer
their consumers convenient ways of product
delivery and services. Therefore, technology
has a positive impact on the company.
However, in context to its rivalries like
Tesco, which plans to “Simply” their
business by cutting down 1700 jobs and
installing technologies that will work for
them, may offer further challenge to Marks &
Spencer in context to technological
advancement (Lawande and Singhal, 2018).
Environmental According to the Environmental Act, 1990,
the company must be aware of protecting the
environment. This can be achieved if the
company focuses on developing products that
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are eco friendly and sustainable products. In
addition, The company must also ban the
usage of plastic bags and polythene as a
means of packaging and delivery. In order to
have proper time delivery the company must
also be aware of the environmental issues in
context to seasonal change. Therefore, they
must have a proper supply chain management
(Legislation.gov.uk, 2019).
Legislation Under the Employment Right Act 1996, the
company must also be concerned about the
needs of their workers and employees in
order to retain them in the future
(Heritage.org, 2019). They must provide
regular promotions and incentives to the
employees to make them happy. The
company must offer the workers with
flexibility in working. This will also be
benefitted for the company in context to
achieving high performance from the
employee side. In addition, this will also
increase the profitability and productivity as
well. Moreover, the company must not
practise unfair dismissal of the employees
(Njoya, 2016). Under the Consumer
Protection Act, 1987, they must provide
proper justification in case they fire an
employee. In addition, the company must
ensure strong bonding between the managers
and the employees (Howells and Weatherill,
2017).
Table 1: PESTEL Analysis of Marks & Spencer
(Source: Created by the Learner)
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